If you were lucky, your mom and dad started teaching you about money from a very young age. I know I started off teaching my daughters how to split their money into thirds; one third went to the piggy bank, one third was used for items they wanted and one third was saved or used for something important this week and the following week it was used for charity.
While schools tend to teach children how to count money, until you reach college, they don’t teach how to save, spend, or invest money.
The following are 5 easy ways to help your child understand and learn how to properly handle their cash.
Start with the Old-Fashioned Piggy Bank
Of course, you can make it any kind of bank you want, but the idea behind this is to teach children to save. When the piggy is full, have them count out the money (help them to roll coins) and open an account in their name. As they get older, explain how interest works and show them how their money can earn money if they leave it alone.
Make a Short-Term Savings Jar
This is a great concept that allows children to understand that piggy bank (money in the bank) is for long-term savings and the jar is for short-term projects, such as new video games or a day at the arcade, for example. It helps to tape or glue a picture of the item they are saving for right on the front of the jar.
Make a Timeline Chart
Money can be confusing for children so visual reinforcement works as a reminder about what money is coming in and where it is going. Using colored pens or markers and a poster, make a yearly timeline which shows where the money goes and where it is. For example, if grandma give Johnny a $50 check for his birthday every year, talk in advance about how the money should be divided and where it will go. Then draw it on the chart, making changes to the savings account and noting when items are purchased.
Set a Good Example
Children love to copy what their parents are doing, so set a good example by keeping a short-term saving jar in the living room or on your bedroom dresser where you (happily and with great excitement) put money in on a regular basis. Make sure you tell your children regularly that you put money aside in a piggy bank (bank account) to save for the future, because it is SO important.
Teach about Charity
I personally believe that it’s a mistake to teach children to be selfish with their money and that amassing a lot of it is the only important thing in life. Most children love to feel helpful and needed and will give willingly if they understand that not everyone has what they have. My children used to love to give to Toys for Tots every year. We also used to take trips to Mexico, where they saw very poor children and were touched by how happy they seemed without material things. When they got older, my daughters volunteered to collect items they owned that they didn’t want or no longer used and took them on our next visit. They were so happy to share these items with other children. Teach your children to give to charity, no matter how little they might have. There is always someone who has less than you do.